The Administration has no objection to House passage of H.R. 2206, which
would
(1) consolidate and clarify various VA programs to assist homeless and
chronically mentally ill veterans and (2) test new approaches to treating
illnesses of some Persian Gulf veterans. The Administration, however, has
concerns about certain provisions of the bill, including:

The Administration particularly objects to the provision of
H.R. 2206 that would prohibit States and localities from purchasing
pharmaceuticals from the Federal Supply Schedule (FSS). The
Administration recognizes that concerns exist about the effect on
Federal buyers of opening up the pharmaceutical FSS, but believes
there is enough uncertainty about the effect that a limited pilot is
warranted. The Administration, therefore, supports a limited pilot
program for pharmaceuticals, beginning with drugs used to treat HIV
and HIV-related conditions and, following a study on the impact of the
pilot, possible expansion to drugs used to treat other
life-threatening conditions.

The Administration is concerned about two personnel provisions
that would provide special treatment for certain groups of VA
employees. One provision would make special pay for certain VA
physicians and dentists creditable for retirement purposes. The other
would exempt certain VA medical care personnel from Executive branch
staffing initiatives, including reductions in the number of
higher-graded employees. Both provisions are inconsistent with the
Administration's workforce restructuring policy, would be inequitable
in their preferential treatment of certain groups of VA employees, and
would establish an undesirable precedent. In particular, the
Administration supports incentives that use agency's discretionary
resources to make one-time cash payments to separating employees
rather than temporary changes to the retirement program, which
increase direct spending over the long-term. The Administration urges
the deletion of both provisions from the bill.

The Administration will work with the Senate to address these and other
concerns.

Pay-As-You-Go Scoring

H.R. 2206 would affect direct spending; therefore, it is subject to the
pay-as-you-go requirement of the Omnibus Budget Reconciliation Act of 1990.
OMB's preliminary scoring estimates of this bill indicate that it would
increase direct spending by $12 million in FY 1998 and a total of $90
million over the period FYs 1998-2002. Therefore, if the bill were enacted
and these FY 1998 costs are not offset during the remainder of this session
of Congress, a pay-as-you-go sequester would be triggered at the end of the
session.